Investment of just Rs. 1000 per month can offer retirement fund of Rs. 20 Lakh – CA Naresh Jakhotia

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Investment of just Rs. 1000 per month can offer retirement fund of Rs. 20 Lakh

CA Naresh Jakhotia

Everyone wish for a handsome retirement amount so that they can stay happy and stay luxury life after retirement. Question arises, how to plan for this in a present market conditions where

–          Market is volatile

–          Gold & silver is showing heavy fluctuation

–          Major components of income goes in tax payment

–          Higher risk carrying investments are risky.

–          Mutual funds investments are giving negative returns.

Everyone at present is looking for safety of the money more than returns.

However, there are investments which not only provide safe investment options but also provide tax free returns. And the returns are also good considering the alternative investment options. Its an investment in PFF.

PPF offers

–          fixed assured returns

–          free from volatility

–          Carry no risk

–          No negative returns possible.

The biggest mantra for handsome returns at the time of retirement is to start investment early.

There is a maximum tenure of 15 years for PPF A/c at one go. However, it can be extended by a period of 5 years by submitting Form H. Copy of Form H is attached at the end of this write-up. Taxpayers can submit Form H for its extension just before the completion of its tenure to extend it for a period of 5 years.

After maturity of 15 years of PPF A/c, investor can extend it by a block period of five years with or without making further contributions. It may be noted that one can extend it by a block of five years at a time, as many times as depositor wish. There is no limit on the number of times you can extend your PPF account.

It may be noted that there is a maximum ceiling of Rs. 1.50 Lakh for investment in the PPF A/c. At present, the interest offered in PPF A/c is 7.10%.

People say that the PPF A/c don’t provide liquidity. Its not true. PPF A/c enables investor to avail the loan facility which can serve the purpose of liquidity. One can read it at –

https://thetaxtalk.com/2018/01/29/know-the-liquidity-of-your-ppf-account-thetaxtalk/#comment-108053

Now, how much retirement fund can be built by making investment in the PPF A/c? Here is an interesting worksheet which shows the value of various investment done by a person from the age of 25 years till the age of 60 years. The investment & returns has totally ignored the tax benefit which is offered as a result of investment in the PPF A/c

  1. By investing Rs. 12000/- monthly from the age of 25 years, taxpayers will be able to get an amount of Rs. 23491259 age of 60 years.. One can refer the spread sheet as under:
Rate of Interest 7.10%
Investment Period  35 Years
Year Age  of Op Balance Contribution Total Interest Closing Balance
  Investor   for the year   for the year  
1 25 0 144000 144000 10224 154224
2 26 154224 144000 298224 21174 319398
3 27 319398 144000 463398 32901 496299
4 28 496299 144000 640299 45461 685760
5 29 685760 144000 829760 58913 888673
6 30 888673 144000 1032673 73320 1105993
7 31 1105993 144000 1249993 88750 1338743
8 32 1338743 144000 1482743 105275 1588018
9 33 1588018 144000 1732018 122973 1854991
10 34 1854991 144000 1998991 141928 2140919
11 35 2140919 144000 2284919 162229 2447148
12 36 2447148 144000 2591148 183972 2775120
13 37 2775120 144000 2919120 207258 3126378
14 38 3126378 144000 3270378 232197 3502575
15 39 3502575 144000 3646575 258907 3905482
16 40 3905482 144000 4049482 287513 4336995
17 41 4336995 144000 4480995 318151 4799146
18 42 4799146 144000 4943146 350963 5294109
19 43 5294109 144000 5438109 386106 5824215
20 44 5824215 144000 5968215 423743 6391958
21 45 6391958 144000 6535958 464053 7000011
22 46 7000011 144000 7144011 507225 7651236
23 47 7651236 144000 7795236 553462 8348698
24 48 8348698 144000 8492698 602982 9095680
25 49 9095680 144000 9239680 656017 9895697
26 50 9895697 144000 10039697 712818 10752515
27 51 10752515 144000 10896515 773653 11670168
28 52 11670168 144000 11814168 838806 12652974
29 53 12652974 144000 12796974 908585 13705559
30 54 13705559 144000 13849559 983319 14832878
31 55 14832878 144000 14976878 1063358 16040236
32 56 16040236 144000 16184236 1149081 17333317
33 57 17333317 144000 17477317 1240890 18718207
34 58 18718207 144000 18862207 1339217 20201424
35 59 20201424 144000 20345424 1444525 21789949
36 60 21789949 144000 21933949 1557310 23491259
37 61 23491259 144000 23635259 1678103 25313362
38 62 25313362 144000 25457362 1807473 27264835
39 63 27264835 144000 27408835 1946027 29354862
40 64 29354862 144000 29498862 2094419 31593281
41 65 31593281 144000 31737281 2253347 33990628
42 66 33990628 144000 34134628 2423559 36558187
43 67 36558187 144000 36702187 2605855 39308042
44 68 39308042 144000 39452042 2801095 42253137
45 69 42253137 144000 42397137 3010197 45407334
46 70 45407334 144000 45551334 3234145 48785479
47 71 48785479 144000 48929479 3473993 52403472
48 72 52403472 144000 52547472 3730871 56278343
49 73 56278343 144000 56422343 4005986 60428329
50 74 60428329 144000 60572329 4300635 64872964
51 75 64872964 144000 65016964 4616204 69633168
52 76 69633168 144000 69777168 4954179 74731347
53 77 74731347 144000 74875347 5316150 80191497
54 78 80191497 144000 80335497 5703820 86039317
55 79 86039317 144000 86183317 6119016 92302333
56 80 92302333 144000 92446333 6563690 99010023
57 81 99010023 144000 99154023 7039936 106193959
58 82 106193959 144000 106337959 7549995 113887954
59 83 113887954 144000 114031954 8096269 122128223
60 84 122128223 144000 122272223 8681328 130953551
61 85 130953551 144000 131097551 9307926 140405477
62 86 140405477 144000 140549477 9979013 150528490
63 87 150528490 144000 150672490 10697747 161370237
64 88 161370237 144000 161514237 11467511 172981748
65 89 172981748 144000 173125748 12291928 185417676
66 90 185417676 144000 185561676 13174879 198736555
67 91 198736555 144000 198880555 14120519 213001074
  1. By investing Rs. 6000/- monthly from the age of 25 years, taxpayers will be able to get an amount of Rs. 11745644 age of 60 years. One can refer the spread sheet as under:
Rate of Interest 7.10%
Investment Period 35 Years
Year Age  of Op Balance Contribution Total Interest Closing Balance
  Investor   for the year   for the year  
1 25 0 72000 72000 5112 77112
2 26 77112 72000 149112 10587 159699
3 27 159699 72000 231699 16451 248150
4 28 248150 72000 320150 22731 342881
5 29 342881 72000 414881 29457 444338
6 30 444338 72000 516338 36660 552998
7 31 552998 72000 624998 44375 669373
8 32 669373 72000 741373 52637 794010
9 33 794010 72000 866010 61487 927497
10 34 927497 72000 999497 70964 1070461
11 35 1070461 72000 1142461 81115 1223576
12 36 1223576 72000 1295576 91986 1387562
13 37 1387562 72000 1459562 103629 1563191
14 38 1563191 72000 1635191 116099 1751290
15 39 1751290 72000 1823290 129454 1952744
16 40 1952744 72000 2024744 143757 2168501
17 41 2168501 72000 2240501 159076 2399577
18 42 2399577 72000 2471577 175482 2647059
19 43 2647059 72000 2719059 193053 2912112
20 44 2912112 72000 2984112 211872 3195984
21 45 3195984 72000 3267984 232027 3500011
22 46 3500011 72000 3572011 253613 3825624
23 47 3825624 72000 3897624 276731 4174355
24 48 4174355 72000 4246355 301491 4547846
25 49 4547846 72000 4619846 328009 4947855
26 50 4947855 72000 5019855 356410 5376265
27 51 5376265 72000 5448265 386827 5835092
28 52 5835092 72000 5907092 419404 6326496
29 53 6326496 72000 6398496 454293 6852789
30 54 6852789 72000 6924789 491660 7416449
31 55 7416449 72000 7488449 531680 8020129
32 56 8020129 72000 8092129 574541 8666670
33 57 8666670 72000 8738670 620446 9359116
34 58 9359116 72000 9431116 669609 10100725
35 59 10100725 72000 10172725 722263 10894988
36 60 10894988 72000 10966988 778656 11745644
37 61 11745644 72000 11817644 839053 12656697
38 62 12656697 72000 12728697 903737 13632434
39 63 13632434 72000 13704434 973015 14677449
40 64 14677449 72000 14749449 1047211 15796660
41 65 15796660 72000 15868660 1126675 16995335
42 66 16995335 72000 17067335 1211781 18279116
43 67 18279116 72000 18351116 1302929 19654045
44 68 19654045 72000 19726045 1400549 21126594
45 69 21126594 72000 21198594 1505100 22703694
46 70 22703694 72000 22775694 1617074 24392768
47 71 24392768 72000 24464768 1736999 26201767
48 72 26201767 72000 26273767 1865437 28139204
49 73 28139204 72000 28211204 2002995 30214199
50 74 30214199 72000 30286199 2150320 32436519
51 75 32436519 72000 32508519 2308105 34816624
52 76 34816624 72000 34888624 2477092 37365716
53 77 37365716 72000 37437716 2658078 40095794
54 78 40095794 72000 40167794 2851913 43019707
55 79 43019707 72000 43091707 3059511 46151218
56 80 46151218 72000 46223218 3281848 49505066
57 81 49505066 72000 49577066 3519972 53097038
58 82 53097038 72000 53169038 3775002 56944040
59 83 56944040 72000 57016040 4048139 61064179
60 84 61064179 72000 61136179 4340669 65476848
61 85 65476848 72000 65548848 4653968 70202816
62 86 70202816 72000 70274816 4989512 75264328
63 87 75264328 72000 75336328 5348879 80685207
64 88 80685207 72000 80757207 5733762 86490969
65 89 86490969 72000 86562969 6145971 92708940
66 90 92708940 72000 92780940 6587447 99368387
67 91 99368387 72000 99440387 7060267 106500654
  1. By investing Rs. 5000/- monthly from the age of 25 years, taxpayers will be able to get an amount of Rs. 9788020 at the age of 60 years. One can refer the spread sheet as under:
Rate of Interest 7.10%
Investment Period 35 Years
Year Age  of Op Balance Contribution Total Interest Closing Balance
  Investor   for the year   for the year  
1 25 0 60000 60000 4260 64260
2 26 64260 60000 124260 8822 133082
3 27 133082 60000 193082 13709 206791
4 28 206791 60000 266791 18942 285733
5 29 285733 60000 345733 24547 370280
6 30 370280 60000 430280 30550 460830
7 31 460830 60000 520830 36979 557809
8 32 557809 60000 617809 43864 661673
9 33 661673 60000 721673 51239 772912
10 34 772912 60000 832912 59137 892049
11 35 892049 60000 952049 67595 1019644
12 36 1019644 60000 1079644 76655 1156299
13 37 1156299 60000 1216299 86357 1302656
14 38 1302656 60000 1362656 96749 1459405
15 39 1459405 60000 1519405 107878 1627283
16 40 1627283 60000 1687283 119797 1807080
17 41 1807080 60000 1867080 132563 1999643
18 42 1999643 60000 2059643 146235 2205878
19 43 2205878 60000 2265878 160877 2426755
20 44 2426755 60000 2486755 176560 2663315
21 45 2663315 60000 2723315 193355 2916670
22 46 2916670 60000 2976670 211344 3188014
23 47 3188014 60000 3248014 230609 3478623
24 48 3478623 60000 3538623 251242 3789865
25 49 3789865 60000 3849865 273340 4123205
26 50 4123205 60000 4183205 297008 4480213
27 51 4480213 60000 4540213 322355 4862568
28 52 4862568 60000 4922568 349502 5272070
29 53 5272070 60000 5332070 378577 5710647
30 54 5710647 60000 5770647 409716 6180363
31 55 6180363 60000 6240363 443066 6683429
32 56 6683429 60000 6743429 478783 7222212
33 57 7222212 60000 7282212 517037 7799249
34 58 7799249 60000 7859249 558007 8417256
35 59 8417256 60000 8477256 601885 9079141
36 60 9079141 60000 9139141 648879 9788020
37 61 9788020 60000 9848020 699209 10547229
38 62 10547229 60000 10607229 753113 11360342
39 63 11360342 60000 11420342 810844 12231186
40 64 12231186 60000 12291186 872674 13163860
41 65 13163860 60000 13223860 938894 14162754
42 66 14162754 60000 14222754 1009816 15232570
43 67 15232570 60000 15292570 1085772 16378342
44 68 16378342 60000 16438342 1167122 17605464
45 69 17605464 60000 17665464 1254248 18919712
46 70 18919712 60000 18979712 1347560 20327272
47 71 20327272 60000 20387272 1447496 21834768
48 72 21834768 60000 21894768 1554529 23449297
49 73 23449297 60000 23509297 1669160 25178457
50 74 25178457 60000 25238457 1791930 27030387
51 75 27030387 60000 27090387 1923417 29013804
52 76 29013804 60000 29073804 2064240 31138044
53 77 31138044 60000 31198044 2215061 33413105
54 78 33413105 60000 33473105 2376590 35849695
55 79 35849695 60000 35909695 2549588 38459283
56 80 38459283 60000 38519283 2734869 41254152
57 81 41254152 60000 41314152 2933305 44247457
58 82 44247457 60000 44307457 3145829 47453286
59 83 47453286 60000 47513286 3373443 50886729
60 84 50886729 60000 50946729 3617218 54563947
61 85 54563947 60000 54623947 3878300 58502247
62 86 58502247 60000 58562247 4157920 62720167
63 87 62720167 60000 62780167 4457392 67237559
64 88 67237559 60000 67297559 4778127 72075686
65 89 72075686 60000 72135686 5121634 77257320
66 90 77257320 60000 77317320 5489530 82806850
67 91 82806850 60000 82866850 5883546 88750396

 

4. Even by investing just Rs. 1000/- monthly from the age of 25 years, taxpayers will be able to get an amount of Rs. 1957597 age of 60 years. One can refer the spread sheet as under:

Year Age  of Op Balance Contribution Total Interest Closing Balance
  Investor   for the year   for the year  
1 25 0 12000 12000 852 12852
2 26 12852 12000 24852 1764 26616
3 27 26616 12000 38616 2742 41358
4 28 41358 12000 53358 3788 57146
5 29 57146 12000 69146 4909 74055
6 30 74055 12000 86055 6110 92165
7 31 92165 12000 104165 7396 111561
8 32 111561 12000 123561 8773 132334
9 33 132334 12000 144334 10248 154582
10 34 154582 12000 166582 11827 178409
11 35 178409 12000 190409 13519 203928
12 36 203928 12000 215928 15331 231259
13 37 231259 12000 243259 17271 260530
14 38 260530 12000 272530 19350 291880
15 39 291880 12000 303880 21575 325455
16 40 325455 12000 337455 23959 361414
17 41 361414 12000 373414 26512 399926
18 42 399926 12000 411926 29247 441173
19 43 441173 12000 453173 32175 485348
20 44 485348 12000 497348 35312 532660
21 45 532660 12000 544660 38671 583331
22 46 583331 12000 595331 42269 637600
23 47 637600 12000 649600 46122 695722
24 48 695722 12000 707722 50248 757970
25 49 757970 12000 769970 54668 824638
26 50 824638 12000 836638 59401 896039
27 51 896039 12000 908039 64471 972510
28 52 972510 12000 984510 69900 1054410
29 53 1054410 12000 1066410 75715 1142125
30 54 1142125 12000 1154125 81943 1236068
31 55 1236068 12000 1248068 88613 1336681
32 56 1336681 12000 1348681 95756 1444437
33 57 1444437 12000 1456437 103407 1559844
34 58 1559844 12000 1571844 111601 1683445
35 59 1683445 12000 1695445 120377 1815822
36 60 1815822 12000 1827822 129775 1957597
37 61 1957597 12000 1969597 139841 2109438
38 62 2109438 12000 2121438 150622 2272060
39 63 2272060 12000 2284060 162168 2446228
40 64 2446228 12000 2458228 174534 2632762
41 65 2632762 12000 2644762 187778 2832540
42 66 2832540 12000 2844540 201962 3046502
43 67 3046502 12000 3058502 217154 3275656
44 68 3275656 12000 3287656 233424 3521080
45 69 3521080 12000 3533080 250849 3783929
46 70 3783929 12000 3795929 269511 4065440
47 71 4065440 12000 4077440 289498 4366938
48 72 4366938 12000 4378938 310905 4689843
49 73 4689843 12000 4701843 333831 5035674
50 74 5035674 12000 5047674 358385 5406059
51 75 5406059 12000 5418059 384682 5802741
52 76 5802741 12000 5814741 412847 6227588
53 77 6227588 12000 6239588 443011 6682599
54 78 6682599 12000 6694599 475317 7169916
55 79 7169916 12000 7181916 509916 7691832
56 80 7691832 12000 7703832 546972 8250804
57 81 8250804 12000 8262804 586659 8849463
58 82 8849463 12000 8861463 629164 9490627
59 83 9490627 12000 9502627 674687 10177314
60 84 10177314 12000 10189314 723441 10912755
61 85 10912755 12000 10924755 775658 11700413
62 86 11700413 12000 11712413 831581 12543994
63 87 12543994 12000 12555994 891476 13447470
64 88 13447470 12000 13459470 955622 14415092
65 89 14415092 12000 14427092 1024324 15451416
66 90 15451416 12000 15463416 1097903 16561319
67 91 16561319 12000 16573319 1176706 17750025

 

Investment in PPF could be one of the biggest retirement planning.

As discussed above, readers can find Form H for extension of PPF A/c as under:

FORM H

[See sub-para (2A) of para 9]

APPLICATION FOR CONTINUANCE OF ACCOUNT UNDER THE PUBLIC PROVIDENT FUND SCHEME, 1968 BEYOND 15 YEARS

To

The Agent/Manager/Post Master,

…………………………………………………………..

My Public Provident Fund Account No………..has completed 15 years, after the initial year of its commencement, on………..

I wish to continue to subscribe to my above-referred account for a further block period of 5 years according to the limits prescribed in paragraph 3 of the Scheme.

Date……………… …………………………………
Signature/thumb impression of
subscriber/guardian

FOR USE IN ACCOUNTS OFFICE

The account completed 15 years after the year of initial subscription on…………………………………… Subscriber’s request has been noted.

Date……………… ……………………………………….
Accounts Officer/Post Master

__________

The complete PPF Rules is also available at www.TheTaxTalk.com

*****************************************************************

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